CUs still exempt from FDCPA, CUNA tells CFPB

Credit unions and for-profit debt collectors have different considerations when communicating with consumers, CUNA wrote to the Consumer Financial Protection Bureau (CFPB) Friday. CUNA wrote to the CFPB as the bureau releases the proposal for a Small Business Review Panel, in accordance with the Small Business Regulatory Enforcement Act of 1996 (SBREFA).

The CFPB released third-party debt collection proposals last month, and CUNA thanked the bureau for recognizing that first-party creditors should be treated differently in the initial debt collection SBREFA process.

“We hope this reflects the CFPB’s understanding that Congress purposefully exempted first-party creditors, including credit unions, from the Fair Debt Collection Practices Act (FDCPA) and therefore, it would be unlawful to extend any rulemaking pursuant to this statute over them,” wrote CUNA Chief Advocacy Officer Ryan Donovan.

Donovan also urged the CFPB to keep in mind that Congress has repeatedly urged the bureau to narrowly tailor its rules to specific consumer abuses, most recently when a bipartisan supermajority of 399 legislators signed a letter to the bureau.

“Credit unions take a more holistic collection approach when working with their member-owners. They are not just interested in short-term efforts of collecting a debt; instead, they try to find out the specific cause of their member’s financial challenge,” Donovan wrote. “Depending on the member’s scenario, credit unions will then modify their efforts to meet their member's needs.”

The letter also points out that, since the FDCPA was enacted in 1978, no subsequent law, including the Dodd-Frank Act, has provided the authority to include credit unions under FDCPA rules.

CUNA’s review of the bureau’s third-party debt collection proposals has found several provisions that will affect credit unions, including highly technical substantiation and oversight requirements, as well as duplicative requirements for mortgage servicers.

“Accordingly, CUNA reminds the CFPB that small credit unions must have an opportunity to weigh in on all aspects of this proposal impacting them, and must have their recommendations considered as part of a SBREFA analysis and report,” the letter reads.

The CFPB has informed CUNA that credit unions will have this opportunity in the future, and CUNA will provide more detailed analysis about the CFPB’s debt collection proposals at that time.

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